Saigon: the next Silicon Valley?

(AsiaLIFE cover, May 2016)

Saigon is attracting the attention of the world’s largest high-tech corporations and is becoming home to thousands of startup companies, prompting people to ask, could this chaotic city of a developing nation become the next Silicon Valley? By Lorcan Lovett. Main photo by Vinh Dao.

About 20 yellow-shirted motorbike riders are delivering food to homes around Saigon right now. These workers represent more than a startup service promising quality groceries to your door. They represent a city undergoing a technical revolution.

Launched by experienced startup talent, Truong Nguyen, 30, in November 2015, Chopp. vn takes orders via an app, using ‘shoppers’ and ‘choppers’ to take the food from trusted chains to the customer – the first of its kind in the country.

It charges a fixed sum of VND40,000 and VND10,000 more for each additional store visited during the shop.

“I realized there was a lot of potential here because of the crises in food security,” says Truong, who came up with the idea as a way of alleviating the stress of handling a busy work schedule and daily chores while working in Canada.

“I thought there was a need to have trusted food brands that are safe but there is also the problem of traffic; getting to the store on your bike,” he explains.

Truong, born in a small town an hour south
 of Saigon, may have struck tech gold. He began promoting the business two months ago and now has more than 1,000 users and 10 to 20 orders 
a day.

“We have got something going here,” he says. “Now it’s a matter of making it more accessible to more Vietnamese.

“A lot of our products cater to expats and higher income families but we have a lot more products planned that will be less expensive for the Vietnamese. Our ultimate goal is to have low-income families afford our services.”

Could it really be true?

California-based Silicon Valley, nicknamed after the silicon used in computer chips, has transformed itself into the tech hub of the US, arguably the world.

Ho Chi Minh City, named after its revolutionary leader, is a restless melee of entrepreneurs, manic traffic and renowned street food.

Like the Valley, it too has made huge leaps, becoming the commercial hub of Vietnam and distinguishing itself as an exciting, expanding market.

But lately, international media has been touting the city as, potentially, the “next Silicon Valley”. It’s a fashionable catchphrase for anywhere that has tech promise, though it’s no throwaway speculation in the eyes of entrepreneurs Eddie Thai and Binh Tran.

The Viet Kieu pair created their reputations in the US – Tran by co-founding tech company Klout, which sold for US$200 million in 2014, and Thai, who was educated at Harvard and Yale.

The pair strayed from the home of Google, Apple and Facebook to focus on a dusty plot of land in District 9, soon to become ‘Saigon Silicon City’.

 

“I do know that Vietnam’s startup scene has had a funny habit of confounding people’s expectations. I mean, five years ago I thought it would take 10 years to get to where we are now.” Eddie Thai, 31

 

As partners in US-based venture capital firm, 500 Startups, they will seek out the country’s budding startups with the possibility of offering a life-changing investment: Chopp.vn got the knock on the door. Still, 31-year-old Thai is realistic about the Silicon Valley comparison.

“I think asking if the next Silicon Valley will be Saigon or New York, or London, or Tel Aviv for that matter, sets the stage for disappointment,” he says.

“Silicon Valley is an incredibly special place, between the concentration of talent, the audacity of belief that any scrappy team can change the future or can fail and try again, the willingness of individuals and businesses to try new products, the pay-it-forward mentality, the financing capacity, the clear and simple regularity environment…it goes on.”

Interestingly for Vietnam, Google’s chief executive Sundar Pichai visited the country last December, meeting the prime minister and announcing that the search engine would help train about 1,400 local IT engineers.

Apple has recently announced plans to invest up to $1 billion to build a database centre in the country. It even sent its co-founder Steve Wozniak to the Southeast Asian nation last year.

On behalf of the world’s leading mobile phone manufacturer, the animated Wozniak delivered a stirring talk to thousands of young Vietnamese entrepreneurs.

Industry expert Anh Minh Do, 31, however, is equally dubious about the ‘Silicon Valley’ comparisons.

Minh, director of Communications at venture capital firm Vertex Ventures, wrote an article 
on Vietcetera countering a BBC feature that suggested Saigon was prepped to become ‘the next’.

“No one really can be the next Silicon Valley. To assume it can have the influence the Valley has over the world and what that creates is asking a lot,” he says.

Minh wrote that the Valley has a unique ecosystem that “grew out of hundreds of years of American history”. He asks the reader to consider that Apple is worth over $530 billion and Vietnam’s GDP was $170 billion in 2013. It simply does not have the money.

“You would need a lot of capital to get Vietnam to that stage,” he says. “Even Singapore does not have that capital.”

Minh says that Apple and Google will have an impact in terms of the GDP of the country overall, but they are more likely to suck up the best talent rather than encourage new creators.

In the article, he writes that even if the BBC’s premise that it is possible for Saigon to become Silicon Valley is true, then it may take 60 to 100 years.

What now then?

Binh and Eddie
(L-R) Binh Tran and Eddie Thai of 500 Startups (photo: TechinAsia)

Both Thai and Minh agree that the Valley comparison isn’t plausible, but they also see Saigon as a fertile ground for Vietnam’s tech future.

“Vietnam can be influential in technology, especially because of the tech talent that exists 
as well as the strength of the entrepreneurs themselves who are very aggressive,” says Minh.

“It will likely become a more serious tech hub. If the current trend continues, we will likely see a few IPOs (initial public offerings – the first sale of stock by a private company to the public). It is promising but not at the scale of the Valley.”

The city, he says, can link the likes of China and the US. It has a formidable arsenal of advantages, such as an abundance of talented computer science students, and what Minh dubs its “secret weapon”: the Vietnamese diaspora community.

A considerable number of study-abroad and overseas Vietnamese are coming home to create startups. Out of 27 of the most successful tech startups from Vietnam, nearly half of them have founders who have worked or studied abroad, according to a Topica Founder Institute study.

Homegrown entrepreneurs will have a better understanding of Vietnam’s problems than entrepreneurs in places like San Francisco or London, although he admits that Vietnam lags in terms of product design, sharing and trust.

“To build a solution you need technical skills, and Vietnam has been said to have great and affordable technical talent,” says Thai.

“To make a solution widespread, you have to have the guts, and Saigon’s entrepreneurs are truly hustlers – really energetic, really resourceful.”

The future, it seems, comes down to collectively using Saigon’s native talent and resources not to replicate Silicon Valley, but to create a Vietnamese version of the Valley.

“The answers are still coming into view,
 but I’ve been really encouraged by more and more people getting into the scene,” says
 Thai, “and learning from each other, by more companies and investors taking a close look at the country, by various government agencies and international organizations moving to support the ecosystem, and, most importantly, by the success that some of our founders and tech talent have demonstrated over the last six to 12 months.”

Minh lists hurdles that Vietnam needs to overcome to flourish as its own unique tech hub.

They include changing policy to make it easier for foreign investment, producing bold investors willing to bet on new companies, those same companies learning the management and product development to go big globally, and, generally, Vietnamese people integrating with foreign cultures.

“It seems that Vietnam is quite strong on technical talent, sheer energy, resourcefulness, and market growth potential,” adds Thai.

“How long will it take for Vietnam to catch up on some of these other points? I don’t know, five years? But I do know that Vietnam’s startup scene has had a funny habit of confounding people’s expectations.

“I mean, five years ago I thought it would take 10 years to get to where we are now. I’m happy to have been wrong on that, and I know it’s not the last time I’ll have been wrong.”

 

– There are more than 40 million internet users and 30 million smartphone users in Vietnam – 

 

Meanwhile, Truong of Chopp has plans to boost more than just food safety in Vietnam. He’s at the beginning of a journey that he hopes will help modernise farming production and aid the remarkable growth of Vietnamese agriculture, whose exports have become big enough to be taken seriously by global competition.

Coffee, cotton, peanuts, rubber, sugarcane, tea, and, of course, rice are the most profitable fields. The efficiency of producing these exports could be better.

“Also the environmental impact of the motorbike culture could be targeted on some level,” he says, hinting at the opportunities. “We have something special here.”

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